Free trade failure

From the early 1970s until now, we have participated in an economic experiment that was intended to create an international economy without barriers, says Martin Feils. Apparently it’s not working. Who would have thought that selling agricultural produce and raw materials to the rest of the world, and buying back their manufactured goods on credit wasn’t a sustainable or viable economic strategy?

It is instructive to read the dialectic of the past 30 years. We were to create internationally competitive, outward-looking industries. The winners Garnaut picked in 1988 were sustained export expansion of non-primary commodities, education and tourism.

This was the sort of language used by the economic rationalists who morphed into free market economists. The rusty sheds are long gone. But so has most of our manufacturing capacity. We have watched our manufacturers sell their brand names and move their businesses to Asia. The services industries have not filled the exports shortfall.

Our foreign debt has been increasing by $50 billion a year for the past three years, despite the mining boom. We owe $600 billion to the rest of the world. We owed $180 billion 12 years ago. We owed nothing in the ’70s.

The grand experiment hasn’t worked. We were supposed to create outward-looking industries that could compete on even terms with the rest of the world. This didn’t happen.

A lot of people have a vested interest in fighting to ensure that our economic policy continues on its present path. They are the winners who have created careers, power and wealth from the evolution of Australia into a barrier-free economy that focuses on selling services within Australia, selling agricultural produce and raw materials to the rest of the world, and buying their manufactured goods.

Change will only occur if we acknowledge that what we have done in the economy has not been the most successful economic strategy we could have devised.